The joint venture will look at long-term, patient investments on solutions that don't lend to an IPO or exit on valuation basis.
The private company of Tata Group doyen Ratan Tata will jointly invest with the $100-billion investment arm of the University of California, in start-ups and companies in India that focus on the segments of mobile telephony, energy, health care and emerging technologies.
The investment cycle would be over 10 years, allowing the recipient companies to mature and earn returns.
Tata’s R N Tata Associates would be the vehicle to fund investments by the University of California (UC) partner, managed by its chief investment officer, Jagdeep Singh Baccher.
In November, Tata joined as an advisor to the investment wing of UC to help on international strategy and investments of over $1 billion in three years into public markets and private assets in Asia, including India.
“We are looking at long-term, patient investments on solutions that don’t lend to an IPO (initial public offer of equity) or exit on a valuation basis. The focus is to bet on great people and build enterprise,” said Baccher.
“Tata would be the right partner.”
UC has around $500 million of investments in stock markets but this would be the first focused plan to invest in start-ups in the country.
The partnership with Tata could eventually help set up its own team in India. The partners did not commit on any investments or figures, saying the engagement had only begun.
Baccher said the partnership would also explore bringing technologies and inventions in the eight universities that come under the University of California, that could help in creating low cost and mass scale solutions.
Since stepping down as chairman of Tata Group, Tata has bought minority stakes in a little over 25 companies.
These include Snapdeal, Ola, Urban Ladder and a Chinese smartphone maker. He says these are private investments, done to learn about emerging businesses and work with youngsters.
“The challenge in investing in a start-up on the one hand is less than investing in stock market systems. At the same time, the risk profile could be higher,” said Tata.
“In my view, the risks and difficulties involved with start-ups are less in magnitude than investing in a major company that has got millions of rupees tied up in a new project.”
He said he appreciated the government’s move to provide support to start-ups and helping build a system for entrepreneurs.
